22 January 2018

We expect the improved investor confidence and the macroeconomic developments we observed in 2017, as well as typical seasonality, to continue to benefit our global wealth management businesses. However, low market volatility is likely to persist in the short term, affecting institutional client activity levels in particular. The positive effect of rising US dollar interest rates on net interest margins will be limited by the continuing low and negative interest rates in Switzerland and the eurozone. Geopolitical factors continue to remain a risk. Implementing the recently agreed upon changes to the Basel III capital standards will result in increasing capital requirements and costs. UBS is well positioned to deal with these challenges and to mitigate their impact on overall performance and profitability by staying disciplined on cost whilst investing in our businesses and infrastructure. By continuing to execute our strategy with discipline, UBS stands to benefit from any further improvement in market conditions.